In his take on Piketty, he writes,

It forced me, for one, to think about and go back and see what economists had said on this issue.

Read the whole post. It raises the possibility that Piketty’s support for his own thesis may not hold up, but the book will still make a major contribution by forcing economists to pay attention to the underlying issues.

I think that is right. For me, the interesting issue concerns the neoclassical production function. The beauty of the NPF is that it offers an integrated theory of growth and distribution, which is exactly how Piketty wants to use it. But the NPF has many known weaknesses. Some possibilities:

1. The weaknesses in the NPF are not important in practice, so it is ok to rely on it for insights, in either narrow or broad applications.
2. The weaknesses in the NPF can be addressed in narrow applications through straightforward modifications. However, for truly broad applications, such as Piketty’s, the necessary modifications are too many and complex to make it practical.
3. The NPF is always and everywhere a source of error and deception, and we need to somehow wean ourselves from it.

Over the years, (3) has been the view of the heterodox left (see Jamie Galbraith on Piketty). The response of mainstream economics to these critiques reminds me of the Woody Allen joke about the guy with a crazy relative who thinks he’s a chicken. Asked why he won’t take the relative to a psychiatrist, the guy answers, “I need the eggs.” Mainstream economists might agree that the NPF is crazy, but they need the eggs. In other words, the mainstream view is somewhere between (1) and (2).

My views are somewhere between (2) and (3), probably closer to (3). Maybe we’re due for an essay that argues (3) from an Austrian sort of viewpoint.